Conservation Easements Pros and Cons in 2024: Keep Ohio Cool and Green

Summers in the Buckeye State can be a sultry affair. Columbus, Ohio has seen its fair share of record-setting heatwaves. In 2024, Columbus experienced its third driest summer since 1879. The winters are no better. The 2023 winter season was the 5th warmest on record (stemming from 145 years of data).  In 1970, the average temperature was 25°F; in 2023, it was 38°F. All available data suggests that climate change is the likely culprit. Surprisingly, one way to beat the heat may involve a unique land protection vehicle known as a conservation easement. From a climate perspective, a green oasis can help cities lessen their urban heat island effect.

 

 

Let us make the case if the above statement doesn’t make much sense. In cities such as Columbus, Ohio, the heat is often exacerbated by what’s known as the urban heat island effect. Dark-colored buildings and pavement absorb the sun’s midday energy and release it slowly at night, keeping temperatures up.

While these 8 sustainability trends drive the commercial real estate industry, the importance of a conservation easement cannot be underscored. So, how do conservation easements fit into the equation for a cooler and greener Ohio? As with every topic, pros and cons help us weigh the decision. Here, we explore conservation easements pros and cons. We also provide a resource so you can speak with conservation easement advisors and inquire about conservation easement appraisals.

What is a Conservation Easement in Ohio?

Conservation easements are voluntary land use agreements in which the landowner agrees to protect a portion of the land they own from future development, often in perpetuity. A conservation easement allows for a property to remain in its natural state and can include forests and nature preserves. By permanently limiting the uses of the land, a conservation easement will protect its conservation values.

Landowners retain multiple rights with a conservation easement, including the right to own and use the land, sell it, and pass it down to their inheritors.

Further, conservation easements do not require public access on privately owned property. These land agreements can stay private, although the owner can charge a land trust, governmental agency, or non-profit organization with managing the easement.

 

What Are Land Trusts for Conservation Easements?

A land trust, or conservation land trust, is a legal public or private entity that gains ownership of, or authority over, a piece of land for conservation purposes at the property owner’s request. A land trust typically gains developmental rights when a conservation easement is in place.

 

Climate Change and Conservation Easement

Conservation easements have become one of the country’s most popular land conservation tools. This type of conservation method allows its holder (typically a conservation land trust) to protect the land without needing to own or manage the property. Land established as a conservation easement is essential to our nationwide climate change mitigation efforts. Conservation easements can help protect water quality and open land for new parks, wildlife preserves, scenic views, or community gardens. They may also help conserve working forests or farmland that is productive. Beyond climate change, we’ll make the case for conservation easements, below.

 

Conservation Easements Pros and Cons

There are many benefits of a conservation easement. The primary benefits of conservation easements are the ability to protect the land, a tax deduction and other tax benefits. The best way to ensure the conservation easement qualifies for maximum tax benefits is to hire a tax advisor and conservation easement appraiser. Ohio conservation easement appraisals are the first step and will determine the value.

Nevertheless, like most items, there are also cons to conservation easements. For example, not all land qualifies for conservation easements; it’s typically perpetual; and is often difficult to set up without a conservation easement consultant.

Landowners’ approach to setting up conservation easements requires careful consideration. A conservation easement can provide landowners with tax incentives and other benefits. However, it is important to determine one’s short—and long-term goals and emotional ties to the property. Below, we outline conservation easements pros and cons.

 

Pros of Conservation Easements

What are some of the advantages of conservation easements? Beyond immediate climate-cooling in urban areas, conservation easements have numerous benefits. The benefits of a conservation easement are as follows:

• You’ll have an opportunity to preserve agricultural land. Conservation easements can protect undisturbed wildlife habitats, grasslands, wetlands, or prime farmland from development. One can also safeguard a scenic view from overdevelopment with a conservation easement.
• There is compelling human interest. Selling or donating property that includes a conservation easement can prevent future development; thus, becoming an essential generational legacy.
• Conservation easements offer flexibility in how the land will be used. One of the most significant advantages of conservation easements is their flexibility. Landowners can tailor the conservation easement to their needs. Since a conservation easement is a voluntary agreement, landowners can also decide precisely how the land will be used now and in the decades ahead.
• Landowners may be eligible for sizable federal income tax deductions. Landowners who establish a conservation easement and donate to a land protection organization may be eligible for a federal income tax deduction equal to the value of their donation. Often, you can deduct 50% of your income for 16 years up to the conservation easement’s appraisal value. (To uncover the value of the easement donation, you should inquire about the services of a qualified property appraiser like those at The Robert Weiler Company. Hiring a well-established, local company to perform the Ohio conservation easement appraisal can provide peace of mind given their history and local market knowledge.) Essentially, the donation equals the difference between the property’s fair market value, before and after the easement takes effect.
• Conservation easements offer other income tax benefits. Conservation easements also qualify for income tax benefits, provided the easement meets specific criteria. The natural land use must be perpetual, held by a qualified governmental or non-profit organization for a legitimate conservation purpose. The property in question should have a genuine appreciable natural, scenic, historical, scientific, agricultural, recreational, or open space importance. As such, not every property can qualify for a conservation easement.
• Landowners that donate conservation easements can receive tax deductions. When a landowner donates a qualified conservation easement, they may be eligible for up to a 50% deduction of their annual adjusted gross income; this deduction applies to the year of the donation and the next five years, or until the conservation easement gift’s value diminishes to zero (whichever happens first).
• Your conservation easement may benefit future generations. When the property passes down to the next generation, the conservation easement may reduce estate taxes.
• Owning a conservation easement is a highly non-intrusive experience. The land trust – the organization overseeing the conservation easement once it’s either donated or sold – usually inspects the property no more than once a year.

Ohio conservation easements aren’t just land protection vehicles for city dwellers. Farmers, too, can benefit – sometimes substantially. This is especially important in Ohio, as the food and agricultural industry contributes more than $100 billion to the local economy. It’s also a state where almost 50 percent of the land is considered “prime farmland,” according to the US Department of Agriculture.

 

Cons of Conservation Easements

What are the disadvantages of a conservation easement? Entering into a conservation easement is an important decision you should not make lightly. While the benefits are plenty, there are a few cons to consider. The disadvantages of conservation easements are as follows:

• Failure to accurately state the conservation easement’s value can land you in hot water. A conservation easement appraisal must be performed if the tax deduction you seek is more substantial than $500,000. With the growing popularity of conservation easements, the IRS is looking more closely at these transactions.
• Land trust operators can be finicky. Again, due to their increasing popularity, conservation easements are overseen by a rapidly expanding roster of land trust operators. Not all are created equally. And some can be bureaucratic and inflexible. Ensure this doesn’t happen by working with a non-profit certified by the Land Trust Accreditation Commission.
• Conservation easements are usually perpetual. This means the conservation easement is never-ending. All owners (including the original and future owners) are subject to the conservation easement. Some conservation easement programs utilize temporary easements; however, they don’t qualify for income and tax benefits like permanent easements.
• The property value can diminish. The property’s future value can decrease due to the easement’s restrictions.
• Not paying attention to the fine print can cost you. Agreements should cover as many variables as possible. Otherwise, conservation land use can change over time, possibly restricting your ability to use ATVs, snowmobiles, or other recreational vehicles. You may also have limitations in installing green technologies like wind turbines.
• Landowners may have a potentially reduced land buyer pool. Sometimes, selling land with a third party, such as a land trust, can reduce the remaining land’s marketability. Do your homework to guarantee that, when you want to sell, there is interest from land buyers who share your views on the protected land.
• Setting up a conservation easement can be complex and costly. Hiring an estate planning attorney and a tax accountant and obtaining a conservation easement appraisal from a licensed property appraiser can immensely help. Speak with conservation easement appraisers at The Robert Weiler Company for more information.

 

U.S. Treasury Department and IRS: Final Regulations for Conservation Easements

The federal conservation easement tax incentive is a critical tool in land conservation. Some bad actors put this incentive at risk through abusive practices, which cost American taxpayers a fortune. Fortunately, with the help of Congress, the U.S. Treasury Department, and the IRS, regulations were passed to end the abuse. The regulations should not affect legitimate conservation easement transactions. The goal is to eliminate abusive schemes.

In June of 2024, the U.S. Treasury Department and IRS issued final regulations (T.D. 9999) regarding the statutory disallowance rule enacted by the SECURE 2.0 Act of 2022 (signed into law in December 2022), part of the “Consolidated Appropriations Act of 2023” [H.R. 2617]). This disallows a federal income tax deduction for a qualified conservation contribution made after December 29, 2022, by either a partnership or an S corporation. The contribution amount must be more than 2.5 times the total of each partner’s or shareholder’s relevant basis in the partnership or S corporation.

Further, in October of 2024, the IRS issued final regulations (T.D. 10007) that identify specific abusive syndicated conservation easement transactions as reportable listed transactions. This regulation clarifies that all participants and material advisers must report these types of transactions to the IRS (including transactions completed in tax years that are still pending).

 

How Many Conservation Easements Exist in 2024?

According to data from the National Conservation Easement Database (NCED), approximately 22 million acres of private land nationwide will be protected by conservation easements in 2024, with about half under land trusts.

The U.S. Department of Agriculture (USDA) partnered with private landowners to protect over 5 million acres of wetlands, grasslands, and premium farmland through conservation easements. Additionally, in their first signup of 2022, the USDA’s Conservation Reserve Program (CRP) accepted over 2 million acres of land from agricultural producers and landowners, which has grown steadily since then. Through the CRP, agricultural producers and landowners establish long-term, resource-conserving plant species to improve soil and water quality, curb soil erosion, and improve wildlife habitat on their agricultural land. Land enrolled in the CRP plays a vital role in nationwide climate change mitigation efforts.

 

Conservation Easement Ohio Stats in 2024

The conservation easements Ohio stats continue to impress! From 2002 to 2023, the Ohio Department of Agriculture preserved 95,822 acres in agricultural production from 631 family farms in 53 counties. Permanent conservation easements under related Ohio Department of Agriculture programs total over 106,00 acres of land preserved in Ohio. In August 2024, the Ohio Department of Agriculture approved local sponsors to buy agricultural conservation easements on 44 family farms totaling 4,286 acres in 34 Ohio counties.

 

Keeping Ohio “Forever Wild”

Surprisingly, “forever wild” is an expression borrowed from our near-state neighbors some 500 miles to our northeast – New York.

“Forever wild” was language inserted into New York’s constitution at the turn of the 20th century. The addition to the constitution protected Adirondack Park (in the State’s north) and Catskill Park in the State’s interior southeast from future development. New York legislators deserve credit for their foresight for a state known for its extensive downstate urban landscape.

According to a research article published by Berkeley Law Scholarship Repository, some 70 percent of protected land in a given year and half of the financial investment in raw or vacant land are devoted to conservation easements in the US. As such, amendments to state constitutions are far from the only way to protect wildlands. Conservation easements can be a much simpler approach than the state legislative process.

 

How Conservation Easement Appraisers at The Robert Weiler Company Can Help

At The Robert Weiler Company, a full-service commercial real estate and appraisal firm, we commit to helping you navigate the conservation easement landscape. As temperatures continue to soar across Central Ohio, protected green spaces become more valuable than gold! Think about how today’s land use preservation decisions could have a powerful impact on the Ohio of tomorrow.

The Robert Weiler Company has been a trusted industry expert for 86 years, particularly to those seeking tax-saving options like conservation easements. Let’s discuss conservation easements’ land-use power and financial potential. Call us today at 614-221-4286 and get your Ohio conservation easement appraisal.

Future generations of Ohioans will thank you!